Terms And Definitions For Consumer Banking
Consumer Banking Terms And Definitions
Below is a list of Consumer Protection glossary terms and definitions commonly used by banking professionals, compliance officers, auditors, mortgage lenders, and consumer finance specialists.
Consumer Protection Laws and Regulations
Ability-to-Repay (ATR) Rule
Requires mortgage lenders to make a reasonable, good-faith determination that a borrower can repay a residential mortgage loan.
Qualified Mortgage (QM)
A mortgage that meets specific legal standards intended to provide consumer protections and reduce lending risk.
Consumer Financial Protection Bureau (CFPB)
The federal agency responsible for enforcing many consumer financial protection laws and regulations.
Credit CARD Act
Federal law that established consumer protections for credit card users, including disclosure requirements and restrictions on certain fees and interest rate increases.
Military Lending Act (MLA)
Federal law providing interest rate limits and other protections for eligible active-duty service members and their dependents.
Servicemembers Civil Relief Act (SCRA)
Federal law providing financial and legal protections to eligible military members during periods of active duty.
Gramm-Leach-Bliley Act (GLBA)
Federal law requiring financial institutions to protect consumers' nonpublic personal information and provide privacy notices.
Right to Financial Privacy Act (RFPA)
Federal law limiting government access to customers' financial records without appropriate legal authorization.
Fair and Accurate Credit Transactions Act (FACTA)
Amendment to the Fair Credit Reporting Act that enhances protections against identity theft and improves credit reporting accuracy.
Credit Repair Organizations Act (CROA)
Federal law regulating businesses that offer credit repair services and establishing consumer protections.
Mortgage Lending Regulations
Loan Estimate (LE)Disclosure provided to mortgage applicants outlining estimated loan costs and terms. Closing Disclosure (CD)
Final disclosure detailing the actual costs and terms of a mortgage loan before closing. Integrated Disclosures (TRID)
Rules combining required mortgage disclosures under federal consumer protection laws into standardized forms. Escrow Disclosure Statement
Statement explaining how escrow funds for taxes and insurance are collected and disbursed. Mortgage Servicing Rules
Federal requirements governing how mortgage servicers communicate with borrowers and manage mortgage loans. Force-Placed Insurance
Insurance obtained by a lender when a borrower fails to maintain required property insurance. Loss Mitigation
Processes used to help borrowers avoid foreclosure through alternatives such as loan modifications or repayment plans. Fair Lending and Equal Access
Redlining
Illegal practice of denying or limiting financial services to certain geographic areas based on prohibited factors. Disparate Treatment
Intentional discrimination by treating similarly situated applicants differently based on a protected characteristic. Disparate Impact
A neutral policy that disproportionately affects a protected group without sufficient business justification. Adverse Action Notice
Written notice explaining why credit was denied or offered on less favorable terms. Protected Class
Group protected from unlawful discrimination under applicable fair lending laws. Fair Lending Risk Assessment
Evaluation of a financial institution's exposure to fair lending compliance risks. Privacy and Information Security
Privacy Notice
Disclosure explaining how a financial institution collects, shares, and protects customer information. Opt-Out Notice
Notice informing consumers of their right to limit certain sharing of personal information. Nonpublic Personal Information (NPI)
Personally identifiable financial information collected by financial institutions. Information Security Program
Policies and safeguards designed to protect customer information. Safeguards Rule
Requirements for financial institutions to develop, implement, and maintain information security programs. Privacy Risk Assessment
Review of risks associated with collecting, storing, and sharing customer information. Deposit Account Regulations
Overdraft Disclosure
Required explanation of overdraft services, fees, and consumer choices. Opt-In Requirement
Consumer consent required before certain overdraft fees may be charged on one-time debit card or ATM transactions. Funds Availability Disclosure
Information explaining when deposited funds will generally be available for withdrawal. Deposit Account Agreement
Contract outlining the terms, conditions, fees, and responsibilities associated with a deposit account. Credit Reporting
Credit Freeze
Restriction that limits access to a consumer's credit report to help prevent identity theft. Fraud Alert
Notice placed on a credit report requesting creditors verify identity before extending new credit. Credit Dispute
Consumer request to investigate potentially inaccurate information on a credit report. Consumer Disclosure
Information a consumer may request regarding the contents of their credit file. Debt Collection and Consumer Rights
Debt Validation Notice
Notice providing information about a debt and a consumer's right to dispute it. Cease Communication Request
Consumer request directing a debt collector to stop most communications. Collection Agency
Business that collects debts on behalf of creditors or purchases delinquent debt. Harassing Collection Practices
Prohibited debt collection behaviors such as threats, repeated unwanted calls, or false representations. Complaint Management
Complaint Resolution
Process of investigating and responding to consumer complaints. Complaint Escalation
Referral of complex or unresolved complaints to higher levels of management. Root Cause Analysis
Process of identifying the underlying cause of recurring customer issues. Corrective Action
Steps taken to address identified compliance or operational deficiencies. Consumer Restitution
Compensation or reimbursement provided to consumers affected by errors or regulatory violations. Compliance Monitoring
Compliance Audit
Independent review of an institution's compliance with applicable laws and regulations. Compliance Testing
Periodic evaluation of policies, procedures, and transactions to verify regulatory compliance. Regulatory Change Management
Process for identifying, implementing, and monitoring new regulatory requirements. Consumer Compliance Risk
Risk of legal, regulatory, financial, or reputational harm arising from noncompliance with consumer protection laws. Corrective Action Plan (CAP)
Documented plan describing how compliance deficiencies will be addressed and monitored. Consumer Financial Rights
Right of Rescission
Right of eligible consumers to cancel certain credit transactions within the legally prescribed period. Error Resolution Process
Procedures financial institutions follow to investigate and resolve reported transaction errors. Billing Error Notice
Consumer notification alleging an error on a billing statement. Electronic Error Resolution
Investigation process for disputed electronic fund transfers under applicable law. Unauthorized Transaction
Financial transaction initiated without the consumer's permission or authority. Identity Theft and Fraud Prevention
Identity Theft Prevention Program
Program designed to detect, prevent, and mitigate identity theft.
Red Flags Rule
Requirements for identifying and responding to warning signs of identity theft.
Authentication
Process of verifying a customer's identity before granting account access.
Multi-Factor Authentication (MFA)
Security method requiring two or more forms of identity verification.
Account Takeover
Fraud in which an unauthorized person gains control of a customer's financial account.
Synthetic Identity Fraud
Fraud involving a fabricated identity created from a combination of real and fictitious information.
